Rail explosions won’t curb soaring oil shipments

HOUSTON — The derailment of a train carrying oil in North Dakota on Monday, and the subsequent evacuations caused by its explosion, could draw more regulatory scrutiny to rail shipments of crude. But the soaring use of trains to move oil is a long-term trend that is not likely to change soon, analysts say.

The incident “will continue discussion of safety issues surrounding train transport of crude oil,” investment banking firm Tudor, Pickering, Holt & Co. said in a note to investors on Tuesday. The derailment “could pressure the permitting processes currently ongoing for rail facilities” on the west coast, the note said.

But the trend of heavy rail use for moving oil is here to stay, the firm said.

“Rail will be the long-term transportation solution out of the Bakken (Shale play of North Dakota) to the U.S. East and West Coasts due to the lack of pipeline infrastructure to those refining centers,” the firm said.

Although pipelines are a much safer way to move oil, a limited availability of lines in areas of booming production has inspired widespread use of rail cars to move crude.

Rail movements of crude have skyrocketed in recent years, growing from 18,000 barrels a day in 2008 to 425,000 barrels a day in 2012.

The growth continued this year, with rail shipments of oil and petroleum products up 31 percent from 2012, according to the Association of American Railroads.

EY Oil & Gas, in a report released in September, argued that even with new pipelines that are under construction or have been recently completed, the flexibility of railroads will give them a permanent role in moving crude.

“Rail is here to stay,” EY analyst Foster Mellen said in September. “You can reroute a train and move it to places where you can’t have a pipeline. The economics of pipelines are almost always going to be superior to rail, but to move that crude from the Bakken to Washington State’s Cherry Point refinery, you don’t have viable options.”

The derailment Monday resulted in the second major explosion of a train carrying oil from North Dakota across North America this year.

A train that derailed and exploded in the Canadian province of Quebec in July decimated parts of the town of Lac-Mégantic. Forty seven people died in the resulting blaze, according to the Associated Press.

The train was reportedly moving oil from North Dakota to a refinery in Canada.

The derailment Monday occurred after a grain train owned by BNSF Railways first derailed in Casselton, North Dakota, according to the National Transportation Safety Board. A train traveling in the opposite direction carrying oil then hit the derailment and also derailed, the agency said. The crash caused explosions that sent huge fireballs into the air near Casselton, North Dakota.

The National Transportation Safety Board said it launched a “go-team” on Monday to investigate the incident.

Photo: Steve Helber / AP

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Workers remove damaged tankers along the tracks where several CSX crude oil cars derailed and caught fire along the James River near downtown Lynchburg, Va., Thursday, May 1, 2014.

Workers remove damaged tankers along the tracks where several CSX crude oil cars derailed and caught fire along the James River near downtown Lynchburg, Va., Thursday, May 1, 2014.

Photo: Steve Helber / AP

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Workers remove damaged tankers along the tracks where several CSX crude oil cars derailed and caught fire along the James River near downtown Lynchburg, Va., Thursday, May 1, 2014.

Workers remove damaged tankers along the tracks where several CSX crude oil cars derailed and caught fire along the James River near downtown Lynchburg, Va., Thursday, May 1, 2014.

Photo: Steve Helber / ASSOCIATED PRESS

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NTSB lead investigator, James Southworth, adjusts his glasses as he address the media during a news conference in Lynchburg, Va., Thursday, May 1, 2014. Southworth will lead the investigation into a CSX oil train derailment near downtown yesterday. Department of Environmental Quality spokesman Bill Hayden said state workers smelled oil downstream from the derailment site during a night-time survey. CSX crews and heavy equipment contractors worked to clear more than a dozen derailed train cars, some carrying crude oil. Two cranes were lifting derailed cars and moving them to a new track. less

NTSB lead investigator, James Southworth, adjusts his glasses as he address the media during a news conference in Lynchburg, Va., Thursday, May 1, 2014. Southworth will lead the investigation into a CSX oil ... more

Photo: Steve Helber / AP

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Workers remove damaged tankers along the tracks where several CSX crude oil cars derailed and caught fire along the James River near downtown Lynchburg, Va., Thursday, May 1, 2014.

Workers remove damaged tankers along the tracks where several CSX crude oil cars derailed and caught fire along the James River near downtown Lynchburg, Va., Thursday, May 1, 2014.

Photo: Steve Helber / ASSOCIATED PRESS

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Workers remove damaged tankers along the tracks where several CSX crude oil cars derailed and caught fire along the James River near downtown Lynchburg, Va., Thursday, May 1, 2014.

Workers remove damaged tankers along the tracks where several CSX crude oil cars derailed and caught fire along the James River near downtown Lynchburg, Va., Thursday, May 1, 2014.

Photo: Steve Helber / ASSOCIATED PRESS

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Survey crews launch boats to look over damaged tanker cars as workers remove them along the tracks where they derailed and caught fire Wednesday along the James River near downtown Lynchburg, Va., Thursday, May 1, 2014. Virginia state officials were still trying Thursday to determine the environmental impact of the train derailment. less

Survey crews launch boats to look over damaged tanker cars as workers remove them along the tracks where they derailed and caught fire Wednesday along the James River near downtown Lynchburg, Va., Thursday, ... more

Photo: Steve Helber / AP

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Workers remove damaged tankers along the tracks where several CSX crude oil cars derailed and caught fire along the James River near downtown Lynchburg, Va., Thursday, May 1, 2014.

Workers remove damaged tankers along the tracks where several CSX crude oil cars derailed and caught fire along the James River near downtown Lynchburg, Va., Thursday, May 1, 2014.

Photo: Steve Helber / AP

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A worker stands by a damaged tanker car that derailed and caught fire along the James River near downtown Lynchburg, Va., Thursday, May 1, 2014. Department of Environmental Quality spokesman Bill Hayden said state workers smelled oil downstream from the derailment site during a night-time survey. CSX crews and heavy equipment contractors worked to clear more than a dozen derailed train cars, some carrying crude oil. Two cranes were lifting derailed cars and moving them to a new track. less

A worker stands by a damaged tanker car that derailed and caught fire along the James River near downtown Lynchburg, Va., Thursday, May 1, 2014. Department of Environmental Quality spokesman Bill Hayden said ... more

Photo: Autumn Parry / AP

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A worker stands by damaged tanker cars where several derailed and caught fire along the James River near downtown Lynchburg, Va., Thursday, May 1, 2014. Department of Environmental Quality spokesman Bill Hayden said state workers smelled oil downstream from the derailment site during a night-time survey. CSX crews and heavy equipment contractors worked to clear more than a dozen derailed train cars, some carrying crude oil. Two cranes were lifting derailed cars and moving them to a new track. less

A worker stands by damaged tanker cars where several derailed and caught fire along the James River near downtown Lynchburg, Va., Thursday, May 1, 2014. Department of Environmental Quality spokesman Bill ... more

Photo: AUTUMN PARRY / AP

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Several CSX tanker cars carrying crude oil were in flames after derailing in downtown Lynchburg, Va., Wednesday, April 30, 2014.

Several CSX tanker cars carrying crude oil were in flames after derailing in downtown Lynchburg, Va., Wednesday, April 30, 2014.

People watch smoke rise from a bridge over the James river after several CSX tanker cars carrying crude oil derailed, Wednesday, April 30, 2014, in Lynchburg, Va. Authorities evacuated numerous buildings Wednesday after the derailment. less

People watch smoke rise from a bridge over the James river after several CSX tanker cars carrying crude oil derailed, Wednesday, April 30, 2014, in Lynchburg, Va. Authorities evacuated numerous buildings ... more

A BNSF train that lost part of its load sits on the tracks near Aliceville, Ala. Friday, Nov. 8, 2013. Emergency officials said three train cars exploded overnight in Pickens County about four miles outside Aliceville, which is near the Mississippi line. A dozen cars derailed and nine were damaged. Yasamie August, a spokeswoman for Alabama Emergency Management Agency, said no injuries were reported. less

A BNSF train that lost part of its load sits on the tracks near Aliceville, Ala. Friday, Nov. 8, 2013. Emergency officials said three train cars exploded overnight in Pickens County about four miles outside ... more

Photo: Dusty Compton / AP

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A BNSF train that lost part of its load sits on the tracks near Aliceville, Ala. Friday, Nov. 8, 2013. Emergency officials said three train cars exploded overnight in Pickens County about four miles outside Aliceville, which is near the Mississippi line. A dozen cars derailed and nine were damaged. Yasamie August, a spokeswoman for Alabama Emergency Management Agency, said no injuries were reported. less

A BNSF train that lost part of its load sits on the tracks near Aliceville, Ala. Friday, Nov. 8, 2013. Emergency officials said three train cars exploded overnight in Pickens County about four miles outside ... more

Photo: Dusty Compton / AP

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A deer crosses the railroad tracks as a BNSF train that lost part of its load sits on the tracks near Aliceville, Ala. Friday, Nov. 8, 2013. Emergency officials said three train cars exploded overnight in Pickens County about four miles outside Aliceville, which is near the Mississippi line. A dozen cars derailed and nine were damaged. Yasamie August, a spokeswoman for Alabama Emergency Management Agency, said no injuries were reported. less

A deer crosses the railroad tracks as a BNSF train that lost part of its load sits on the tracks near Aliceville, Ala. Friday, Nov. 8, 2013. Emergency officials said three train cars exploded overnight in ... more

Photo: Dusty Compton / AP

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A tanker train carrying crude oil burns after derailing in western Alabama outside Aliceville, Ala., early Friday, Nov. 8, 2013. The train exploded, sending flames and black smoke into the air and temporarily forcing one family to leave their home. A dozen cars derailed and nine were damaged. less

A tanker train carrying crude oil burns after derailing in western Alabama outside Aliceville, Ala., early Friday, Nov. 8, 2013. The train exploded, sending flames and black smoke into the air and temporarily ... more

Photo: Bill Castle / ASSOCIATED PRESS

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A tanker train carrying crude oil burns after derailing in western Alabama outside Aliceville, Ala., early Friday, Nov. 8, 2013. The train exploded, sending flames and black smoke into the air and temporarily forcing one family to leave their home. A dozen cars derailed and nine were damaged. less

A tanker train carrying crude oil burns after derailing in western Alabama outside Aliceville, Ala., early Friday, Nov. 8, 2013. The train exploded, sending flames and black smoke into the air and temporarily ... more

Photo: Bill Castle / AP

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A tanker train carrying crude oil burns after derailing in western Alabama outside Aliceville, Ala., early Friday, Nov. 8, 2013. The train exploded, sending flames and black smoke into the air and temporarily forcing one family to leave their home. A dozen cars derailed and nine were damaged. less

A tanker train carrying crude oil burns after derailing in western Alabama outside Aliceville, Ala., early Friday, Nov. 8, 2013. The train exploded, sending flames and black smoke into the air and temporarily ... more

Photo: Bill Castle / AP

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A tanker train carrying crude oil burns after derailing in western Alabama outside Aliceville, Ala., early Friday, sending flames and black smoke into the air and temporarily forcing one family to leave their home. Emergency officials said three train cars exploded overnight in Pickens County which is near the Mississippi/Alabama line. A dozen cars derailed and nine were damaged. (AP Photo/Alabama Emergency Management Agency) less

A tanker train carrying crude oil burns after derailing in western Alabama outside Aliceville, Ala., early Friday, sending flames and black smoke into the air and temporarily forcing one family to leave their ... more

Photo: unknown / ASSOCIATED PRESS

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A BNSF train that lost part of its load sits on the tracks near Aliceville, Ala. Friday, Nov. 8, 2013. Emergency officials said three train cars exploded overnight in Pickens County about four miles outside Aliceville, which is near the Mississippi line. A dozen cars derailed and nine were damaged. Yasamie August, a spokeswoman for Alabama Emergency Management Agency, said no injuries were reported. less

A BNSF train that lost part of its load sits on the tracks near Aliceville, Ala. Friday, Nov. 8, 2013. Emergency officials said three train cars exploded overnight in Pickens County about four miles outside ... more

Photo: Dusty Compton / AP

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Smoke rises from a BNSF train that lost part of its load Friday, Nov. 8, 2013 near Aliceville, Ala. Emergency officials said three train cars exploded overnight in Pickens County about four miles outside Aliceville, which is near the Mississippi line. A dozen cars derailed and nine were damaged. Yasamie August, a spokeswoman for Alabama Emergency Management Agency, said no injuries were reported. less

Smoke rises from a BNSF train that lost part of its load Friday, Nov. 8, 2013 near Aliceville, Ala. Emergency officials said three train cars exploded overnight in Pickens County about four miles outside ... more

Photo: Dusty Compton / AP

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Smoke rises from a BNSF train that lost part of its load Friday, Nov. 8, 2013 near Aliceville, Ala. Emergency officials said three train cars exploded overnight in Pickens County about four miles outside Aliceville, which is near the Mississippi line. A dozen cars derailed and nine were damaged. Yasamie August, a spokeswoman for Alabama Emergency Management Agency, said no injuries were reported. less

Smoke rises from a BNSF train that lost part of its load Friday, Nov. 8, 2013 near Aliceville, Ala. Emergency officials said three train cars exploded overnight in Pickens County about four miles outside ... more

Photo: Dusty Compton / AP

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A fireball goes up at the site of an oil train derailment Monday, Dec 30, 2013, in Casselton, N.D. The train carrying crude oil derailed near Casselton Monday afternoon. Several explosions were reported as some cars on the mile-long train caught fire. less

A fireball goes up at the site of an oil train derailment Monday, Dec 30, 2013, in Casselton, N.D. The train carrying crude oil derailed near Casselton Monday afternoon. Several explosions were reported as ... more

Photo: Bruce Crummy / ASSOCIATED PRESS

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A fireball goes up at the site of an oil train derailment Monday, Dec 30, 2013, in Casselton, N.D. The train carrying crude oil derailed near Casselton Monday afternoon. Several explosions were reported as some cars on the mile-long train caught fire. less

A fireball goes up at the site of an oil train derailment Monday, Dec 30, 2013, in Casselton, N.D. The train carrying crude oil derailed near Casselton Monday afternoon. Several explosions were reported as ... more

Photo: Bruce Crummy / ASSOCIATED PRESS

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Smoke rises after a train derailment and fire west of Casselton, N.D., Monday, Dec. 30, 2013. No one has been reported hurt in the derailment or fire. By late Monday afternoon, the smoke plume was diminishing and was staying mostly away from town. less

Smoke rises after a train derailment and fire west of Casselton, N.D., Monday, Dec. 30, 2013. No one has been reported hurt in the derailment or fire. By late Monday afternoon, the smoke plume was diminishing ... more

Photo: Ken Pawluk / Cass County Commissioner/ASSOCIATED PRESS

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The water tower in Casselton, N.D., is covered with soot, early Tuesday, Dec. 31, 2013, from an oil train derailment and explosion on Monday afternoon.

The water tower in Casselton, N.D., is covered with soot, early Tuesday, Dec. 31, 2013, from an oil train derailment and explosion on Monday afternoon.

Photo: Dave Kolpack / AP

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A fireball goes up at the site of an oil train derailment Monday, Dec 30, 2013, in Casselton, N.D. The train carrying crude oil derailed near Casselton Monday afternoon. Several explosions were reported as some cars on the mile-long train caught fire. less

A fireball goes up at the site of an oil train derailment Monday, Dec 30, 2013, in Casselton, N.D. The train carrying crude oil derailed near Casselton Monday afternoon. Several explosions were reported as ... more

Photo: Bruce Crummy / AP

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Smoke rises after a train derailment and fire west of Casselton, N.D., Monday, Dec. 30, 2013. No one has been reported hurt in the derailment or fire. By late Monday afternoon, the smoke plume was diminishing and was staying mostly away from town. less

Smoke rises after a train derailment and fire west of Casselton, N.D., Monday, Dec. 30, 2013. No one has been reported hurt in the derailment or fire. By late Monday afternoon, the smoke plume was diminishing ... more

Photo: Ken Pawluk / AP

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In a screenshot from video provided by Darrin Rademacher, a fireball goes up at the site of an oil train derailment Monday, Dec 30, 2013, in Casselton, N.D. The train carrying crude oil derailed near Casselton Monday afternoon. Several explosions were reported as some cars on the mile-long train caught fire. less

In a screenshot from video provided by Darrin Rademacher, a fireball goes up at the site of an oil train derailment Monday, Dec 30, 2013, in Casselton, N.D. The train carrying crude oil derailed near Casselton ... more

Photo: Darrin Rademacher / ASSOCIATED PRESS

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A fire from a train derailment burns uncontrollably as seen in this aerial photograph Monday, Dec. 30, 2013, west of Casselton, N.D. No one has been reported hurt in the derailment or fire. By late Monday afternoon, the smoke plume was diminishing and was staying mostly away from town. less

A fire from a train derailment burns uncontrollably as seen in this aerial photograph Monday, Dec. 30, 2013, west of Casselton, N.D. No one has been reported hurt in the derailment or fire. By late Monday ... more